The NIMH MATRICS and CNTRICS initiatives have clarified the domains of cognitive functioning that are most relevant to treatment development targeting improved cognition and functioning in people with schizophrenia. These projects also identified specific tasks that are psychometrically sound and well validated in patient populations, and that, in the case of CNTRICS, have well understood neurophysiology. More recently, interest has increased in identifying tasks that meet these criteria and that are sensitive to treatment effects. Identification of such tasks is important for grounding our understanding of illness progression and recovery processes within a cognitive neuroscience framework. This information would also allow for cognitive neuroscience-based indicators of treatment responsiveness, and therefore for more targeted drug development efforts and early prediction of medication response. Promising candidates for this type of task are measures of perceptual organization. Selected tests of perceptual organization meet the criteria of psychometric soundness (including avoidance of generalized deficit confounds), validation in patient studies, and known neurophysiology, although evidence regarding treatment effects at this point comes from very limited data. We now propose to conduct the first study in which schizophrenia patients are followed-up from the acute to stabilization to stable phases of illness, to determine whether perceptual organization dysfunction normalizes over the course of recovery. We will also determine if perceptual organization indices are most relevant for an illness subtype characterized by poor premorbid functioning, poor prognosis, and disorganized symptoms - relationships suggested by past studies. In addition, we will examine the course of perceptual organization in a first-episode population, which has not been previously described. Some evidence suggests that perceptual organization is normal or exaggerated at first episode. We will clarify whether the impairment is present at first episode or whether it develops within 15 months after initial hospitalization. For patients who begin to demonstrate impairment during the follow-up period, we will determine with what clinical and functioning changes the emerging abnormality is associated. We will explore these issues using a follow-up design in which we will enroll first-episode and later-episode schizophrenia patients (and a healthy control group), test them at hospital admission and discharge, and then again every 3 months, over a 15-month period. We will also examine covariation between changes in perceptual organization and changes in symptoms and level of functioning. The proposed project is consistent with two objectives from the NIMH Strategic Plan: 1) Strategy 1.3: Identify and integrate biological markers (biomarkers) and behavioral indicators associated with mental disorders; and 2) Strategy 2.1: Define the developmental trajectories of mental disorders. This study will determine the extent to which performance-based indices from promising perceptual organization tasks serve as biomarkers of illness processes for schizophrenia in general, or for a severely disabled illness subtype.